Financial Analysis: Franklin Resources (NYSE:BEN) and Federated Hermes (NYSE:FHI)
Franklin Resources (NYSE:BEN) and Federated Hermes (NYSE:FHI) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.
Franklin Resources pays an annual dividend of $1.08 per share and has a dividend yield of 4.2%. Federated Hermes pays an annual dividend of $1.08 per share and has a dividend yield of 3.0%. Franklin Resources pays out 42.9% of its earnings in the form of a dividend. Federated Hermes pays out 40.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Franklin Resources has increased its dividend for 38 consecutive years. Franklin Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Franklin Resources and Federated Hermes’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Franklin Resources||$5.77 billion||2.20||$1.20 billion||$2.52||10.16|
|Federated Hermes||$1.33 billion||2.77||$272.34 million||$2.69||13.49|
Franklin Resources has higher revenue and earnings than Federated Hermes. Franklin Resources is trading at a lower price-to-earnings ratio than Federated Hermes, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
48.5% of Franklin Resources shares are held by institutional investors. Comparatively, 82.2% of Federated Hermes shares are held by institutional investors. 22.2% of Franklin Resources shares are held by insiders. Comparatively, 5.5% of Federated Hermes shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This is a summary of current ratings and target prices for Franklin Resources and Federated Hermes, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Franklin Resources currently has a consensus price target of $27.20, indicating a potential upside of 6.25%. Given Franklin Resources’ higher probable upside, research analysts plainly believe Franklin Resources is more favorable than Federated Hermes.
Volatility and Risk
Franklin Resources has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500. Comparatively, Federated Hermes has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500.
This table compares Franklin Resources and Federated Hermes’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Franklin Resources beats Federated Hermes on 8 of the 15 factors compared between the two stocks.
About Franklin Resources
Franklin Resources, Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides its services to individuals, institutions, pension plans, trusts, and partnerships. It launches equity, fixed income, balanced, and multi-asset mutual funds through its subsidiaries. The firm invests in the public equity, fixed income, and alternative markets. Franklin Resources, Inc. was founded in 1947 and is based in San Mateo, California with an additional office in Hyderabad, India.
About Federated Hermes
Federated Investors, Inc. engages in the provision of investment management products and related financial services. It sponsors, markets and provides investment-related services to sponsored investment companies, Federated Funds, and Separate Accounts which include separately managed accounts (SMAs), institutional accounts, sub-advised funds and other managed products in both domestic and international markets. The company was founded by John F. Donahue and Richard B. Fisher in October 1955 and is headquartered in Pittsburgh, PA.
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